Ecuador Goes Full Banana Republic If It Swaps $4.1 Billion In Trade For ... Snowden

Trade: Most nations would kill to have Ecuador's free-trade privileges with the U.S. Ecuador, however, has decided to scrap them for the fun of tweaking the U.S. over the Edward Snowden issue. It's gone full banana republic.

The radical-socialist South American country announced its decision to scrap its tariff-free trading pact with the U.S. Thursday, in response to a warning from a U.S. senator that its arrangement — granted in 1991 in exchange for its help in the war on drugs — would be jeopardized if the country granted National Security Agency renegade Edward Snowden asylum there.

It was unprecedented. Nobody gives up free trade, particularly under the agreement Ecuador has, which means free trade without reciprocation.

But rather than correct course in the interest of saving its $4.1 billion in exports to the U.S. of roses, broccoli, artichokes, shrimp and, yes, bananas, Ecuador's mad leftist president Rafael Correa yelled "blackmail" and his communications minister, Fernando Alvarado, held a press conference to announce, "Ecuador gives up, unilaterally and irrevocably, the said customs benefits."

It's a bad trade. Ecuador is effectively proposing to give up $9.5 billion in total oil and non-oil export trade with the U.S., accounting for half of all its trade, in exchange for ... Snowden, who's holed up without travel papers in a Moscow airport, waiting to be rescued.

Now, as members of an anti-free-market government that ranks rock-bottom on everything from corruption to foreign investment to freedom of the press on international rankings, throwing their nation's private sector to the dogs is a small thing compared to the buzz they expect to get from annoying Uncle Sam.

But for Ecuador's private sector, it's another story.

"This 'resolution' is worse than what everyone thinks, it hurts directly our first private export: bananas, and kills the incipient flower and vegetables that need this help to survive," e-mailed Ecuadorean businessman Antonio Kure. "These people are out of their minds."

The government decision is "an irresponsible act, a hostile position to a friendly nation that also is the principal economic and commercial partner of our country," said Blasco Penaherrera Solah, chief of the Quito Chamber of Commerce, in a television interview reported in El Comercio.

"The problem in this case is our competitiveness," said analyst Roberto Villacreces, of the Instituto Ecuatoriano de Economia Politica in Guayaquil. "We ship 45% of our exports to the U.S. Besides losing those, we also stand to lose investment — from oil to agriculture."

The consequence, he said, would be an acceleration of companies moving their headquarters to nations with hard U.S. free-trade pacts, such as Peru and Colombia.

Any nation on earth would consider that a fool's bargain. Not Ecuador. Doesn't mean they aren't fools.

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